China

U.S. Charges Five Chinese Military Hackers With Online Spying

From left: U.S. Attorney General Eric Holder, U.S. Attorney for Western District of Pennsylvania David Hickton, and Assistant Attorney General for National Security John Carlin on May 19 at the Department of Justice in Washington

The Justice Department today announced the indictment of five Chinese military hackers for online spying against U.S. steel, nuclear power, and solar companies, marking the first charges of this kind by the U.S. against another state.

The U.S. charges that the five conspired to break into the computers of major U.S. companies, including Alcoa, and steal trade secrets that provided competitive advantage to Chinese state-owned companies, according to an indictment unsealed today in the Western District of Pennsylvania.

“For too long, the Chinese government has blatantly sought to use cyber espionage to obtain economic advantage for its state-owned industries,” said FBI Director James B. Comey in a press release. “The indictment announced today is an important step. But there are many more victims, and there is much more to be done.”

Starting in 2006 and continuing until last month, the spies—with memorable online handles such as UglyGorilla and KandyGoo—stole proprietary information and internal communications from Westinghouse Electric, U.S. Steel (X), Allegheny Technologies (ATI), Alcoa (AA), and subsidiaries of SolarWorld (SWV:GR), according to the indictment.

The U.S. government and private security researchers have been tracking the depredations of Chinese hackers on U.S. companies for years, including the online footprints of Ugly Gorilla, the alias of one of the indicted hackers, Wang Dong. Ugly Gorilla has been identified with the campaigns of Comment group, one of the best-known teams that has been linked to intrusions at hundreds of organizations in the past decade.

Mandiant (FEYE) released a public report in February 2013 detailing hacking linked to a Shanghai-based unit of the People’s Liberation Army, and last May the Pentagon for the first time directly accused China of a cyber-espionage campaign against the U.S. government. Last June, President Barack Obama held talks on cybersecurity with Chinese President Xi Jinping at the Sunnyland estate in Rancho Mirage, Calif. At the time, Xi rejected charges that China is responsible for anti-U.S. cyber assaults.

Then the Edward Snowden leaks hit, and most of the world’s attention has since been focused on U.S. spying by the National Security Agency. The U.S. government has sought to draw a distinction between its own activity and China’s targeting of corporate secrets to give its own companies an economic advantage. Reports that the NSA has spied on the Chinese company Huawei Technologies (002502:CH) have undercut those distinctions, and today’s indictment is going to be seen in both China and the rest of the world as hypocritical, says, Adam Segal, a specialist in cybersecurity and China at the Council on Foreign Relations in New York.

The legal action against Chinese hackers, rich as it may be in symbolism, won’t do much to solve the actual problems the U.S. faces, he adds.

“I just don’t know how it plays out really—they can’t get their hands on them, and what do the Chinese do in response?” said Segal. “Symbolically, yes, important. Calling out the Chinese is important. Not going to change very much on the ground.”